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Where now for air cargo? A year in review
2022 has seen its fair share of challenges within the logistics industry, as the UK continued to navigate post-pandemic life and the government underwent reforms.
As the economy returned to a new normal, air cargo has proved its value as a key link in keeping the country’s supply chain intact, but has also created opportunities and enabled expansion in international trading.
INTERNATIONAL TRADE SOARS
International trade volumes have grown since 2022, with UK goods trade up by 29% in October 2022 compared with October 2021, showing a healthy appetite for future post-pandemic trading. The air cargo capacity of UK airlines in September 2022 was double the volume of the previous year (CAA, 2022), mainly owing to the increased availability of belly-hold space in passenger aircraft.
Flightpath to the Future, published by the Department for Transport (DfT) in May 2022, outlines a new strategic framework for the UK aviation sector that recognises the role of air freight in supporting both the country and economy. Flightpath to the Future contains a 10-point plan for aviation which will be welcomed across the economy, introducing a strategy aimed at building an innovative and sustainable aviation sector which should benefit all sectors of business.
FUEL COSTS RISE, FREIGHT RATES FALL
Air cargo is a more cost-prohibitive mode of transporting goods, compared to road or water freight, in part because of the amount and fluctuating price of fuel used. Compared to 2021, the price of kerosene, the fuel used in aeroplanes, has soared in the past 12 months. One barrel of kerosene cost £130 in December 2022, compared to £76 in November 2021 (IATA, 2022). Historically, the price of kerosene has trended with the freight rate of air cargo; however, air freight rates have eased as the global economy has opened post-lockdowns and more flights have returned to the skies. For example, air freight rates between Hong Kong and Europe have declined 31% year-on-year in December 2022 (ACN, 2022). As passenger travel levels, and the freight carried on passenger flights continues to increase with the rest of the world re-opening, it is hoped that prices will continue to stabilise and, potentially, fall.
DECARBONISATION REPORT TAKES WING
The Jet Zero Strategy report, published in July 2022, includes a five-year delivery plan laid out by government to meet its commitment that, as with other sectors, aviation emissions from the UK will be brought down to net zero by 2050, with sub-targets to make all UK domestic flights and airports net zero by 2040. The consultation on airport decarbonisation is yet to be published, but Logistics UK hopes this will be released in early 2023.
POLITICAL MOVES
2022 has seen significant changes in government, including three Transport Secretaries and frequent changes to the ministerial line-up. However, following her appointment as a transport minister in April 2019, Baroness Vere has remained at DfT and her appointment in November 2022 as minister for aviation and shipping will bring welcome insight and understanding to the role.
Alexandra Herdman, Senior Policy Manager, Logistics UK, said: “Logistics UK is still calling for more collaboration between departments in Whitehall, including the Department for International Trade (DIT), the Cabinet Office and Department for Business, Energy and Industrial Strategy (BEIS) with DfT to prevent working in silos and speed the decision-making process; issues impacting transport cut across many government departments. In 2023, it is essential that topics such as the production of sustainable aviation fuel (SAF) are not exclusive to transport. DfT and BEIS both have an interest in UK production of SAF, which Logistics UK and our members want to see become more readily available and more cost effective as we lead into a new year.”
*www.logistics.org.uk/air
Published On: 05/01/2023 16:00:50
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